German multinational software company SAP has been ordered by the Special Tribunal to pay the Special Investigating Unit (SIU) R500m within seven days.
The SIU stated that the order was a result of a settlement agreement reached between the SIU and SAP regarding the validity of two contracts awarded to SAP by Eskom. The settlement agreement has been made an order of the tribunal.
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Invalidity of Contracts
In an order issued by Tribunal Judge President Lebogang Modiba on March 20, she declared the SAP Cloud Services Agreement, concluded between Eskom and SAP on December 15, 2016, as constitutionally invalid and set it aside.
The SIU’s investigation revealed that between 2013 and 2016, Eskom and SAP entered into two contracts, an Enabling Agreement and a Cloud Services Agreement, worth approximately R1.1bn.
Non-Compliance with Public Finance Management Act
The SIU’s findings showed that these agreements did not comply with the Public Finance Management Act, resulting in Eskom incurring fruitless and wasteful expenditures.
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Furthermore, it was discovered that after Eskom entered into a contract with SAP, the German company entered into a sales commission agreement with Cad House CC, a Gupta-linked company. Payments from Eskom to SAP were then channelled to Cad House.
The SIU emphasized that the settlement agreement does not absolve SAP or any implicated party from possible prosecution. The order by the Special Tribunal is part of the implementation of the SIU investigation outcomes and aims to recover financial losses suffered by state institutions due to negligence or corruption.
 in the Eskom case. The SIU found that the contracts awarded to SAP by Eskom were invalid and non-compliant with the Public Finance Management Act, leading to fruitless and wasteful expenditures.){kind=link}